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U.S. stocks on Monday ended at a new record closing high, as markets got a late push following the Treasury department’s reduction in its quarterly borrowing estimate.
Investors also looked ahead to a jam-packed week with the first Federal Reserve monetary policy committee meeting of the year and quarterly reports from megacap tech companies comprising 24% of the S&P 500’s (SP500) weightage.
The tech-heavy Nasdaq Composite (COMP.IND) gained 1.12% to close at 15,628.04 points, while the benchmark S&P (SP500) rose 0.76% to settle at 4,927.90 points. The blue-chip Dow (DJI) added 0.59% to conclude at 38,333.45 points.
All 11 S&P sectors ended in the green, with the exception of Energy.
Wall Street is coming off its third straight weekly gain, largely on the back of an advance in technology stocks and expectations for interest rate cuts.
This week, Microsoft (MSFT), Apple (AAPL), Alphabet (GOOG) (GOOGL), Amazon (AMZN) and Meta (META) will report their earnings. The companies make up 24% of the S&P 500’s (SP500) weightage, with Microsoft (MSFT) and Apple (AAPL) alone valued at more than $3T each.
The other big event this week will be the Fed’s monetary policy committee meeting, which kicks off on Tuesday and ends on Wednesday. Markets are widely anticipating the central bank to keep rates unchanged, with the focus more on chair Jerome Powell’s comments for clues on interest rate cuts, something which traders have aggressively priced in and has been one of the chief drivers of Wall Street’s rally.
“After hovering near the breakeven line for most of the trading session, all major U.S. market indices took off late in the day to close firmly in the green. With equities hitting new all-time highs, investor expectations going into mega-cap tech earnings this week are lofty, and any sort of disappointment could spark a corrective pullback,” Ahan Vashi, investing group leader of The Quantamental Investor, told Seeking Alpha.
“The Fed meeting is another wildcard that investors must contend with over the next few sessions. The bond market is still pricing in 5-6 rate cuts for this year, which in our view, is an overly aggressive positioning given the Fed’s guidance for just 3 rate cuts in 2024. We are reaching the point where rubber meets the road, and I think investors should prepare for heightened volatility,” Vashi added.
The U.S. Treasury on Monday released its estimates of privately-held net marketable borrowing for the January to March and April to June quarters. For the former, the Treasury said it expects to borrow $760B in privately-held net marketable debt, lower than its earlier estimate of $805B. The estimates come before the Treasury’s quarterly refunding announcement on Wednesday.
Treasury yields were lower on Monday, and extended their losses after the borrowing estimates as traders picked up bonds. The longer-end 30-year yield (US30Y) was down 7 basis points to 4.32%, while the 10-year yield (US10Y) was down 8 basis points to 4.08%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 5 basis points to 4.31%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
Among active movers, SoFi Technologies (SOFI) surged after the digital financial services provider delivered strong quarterly loan originations growth. The company is known for refinancing student loans.
Shares of iRobot (IRBT) retreated after the Roomba vacuum cleaner maker called it quits on its planned takeover by Amazon (AMZN).
Read More: Stock Market News Today: Markets end at new record closing high (SP500)